Agenda item
Report to Those Charged with Governance - ISA260 2013/14
- Meeting of Audit Committee, Wednesday, 23rd September, 2015 7.00 p.m. (Item 3.1)
- View the background to item 3.1
Report to follow.
Minutes:
At the Chair’s invitation, Andrew Sayers, Engagement Partner, KPMG, presented the report which related to the annual external auditor’s report for the period 2013/14. The Committee was informed:
- That, as external auditors, KPMG
were responsible for the audit of:
- Financial arrangements
- Ensuring that the Council secured value for money(VFM)
- The exercise of any other audit powers as considered necessary and appropriate.
- That the completion of the annual audit had been deferred pending the conclusion of the investigation by PWC undertaken under the instructions of the Secretary of State. Following the final report being issued, we were able to undertake further enquiries arising from the report’s findings and additional information received from other parties. Once these were completed we were able to complete our work and issue our audit opinion.
- The Audit Opinion on the financial statements is unqualified
- That KPMG had viewed the draft governance statement and this was considered to be consistent with our knowledge.
- That in relation to VFM, the various matters highlighted by PWC and additional information received from other parties had been examined and based on this assessment, and an adverse conclusion on the adequacy of the Council’s arrangements to deliver value for money would be issued.
- That a Section 11 recommendation would be made recommending that the Council’s governance arrangements should be reviewed.
- Normally, such a recommendation would need to be considered by the Council within a month. However, in view of the impending arrival of the new Chief Executive, KPMG were prepared to consider extending this normal deadline requirement..
· That KPMG would not presently exercise its other statutory auditor powers. In terms of a public interest report there had been significant publicity around the matters raised through the PWC investigation. In respect of potential items of account contrary to law KPMG’s view is not to seek a declaration from the court given the amounts involved are not material and the relatively small benefit to be obtained from further action and the significant cost to the local taxpayers of taking court action.
- Once all final steps have been completed, the audit opinion will be issued. This was expected to be within the next two to three weeks.
In response to Members’ questions the following information was provided:
- Concerning reasons why issues identified through PWC investigations which were of long-standing had not been made known in previous ISA260 reports, the Committee was informed that since KPMG had become the Council's external auditors it had identified some such issues and commented on them in previous ISA260 reports. However the cumulative effects of the issues identified had not been evident at the time of earlier reporting.
- The Section 11 recommendations would have no impact on the opinion being issued on the accounts. The publication of a Section 11 recommendation was a separate and compulsory process but it did not prevent the signing of the accounts. . Mr Sayers anticipated that the 2013/14 accounts would be finalised in the near future.
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Concerning the status of ISA260 report relating to
2014/15 accounts, Mr Sayers advised that:
- There might be some effects of the Section 11 publication in 2014/15, in terms of giving an update of progress, but it was not anticipated that it would be necessary to issue a further Section 11 report in relation to 2014/15.
- The accounts should be ready by the end of the year and requested that Audit Committee should convene in the New Year in order to consider them and the auditor’s report on them.
- Responding to a Member comment that the effects of the Section 11 report were likely to continue into future years, Mr Sayers advised:
- that it was intended that the ISA260 report 2014/15 and those of subsequent years would record progress made to rectify the issues identified.
- Many of issues that have resulted in the adverse opinion proposed in the ISA260 report before the Committee relating to 2013/14 would still be present into 2014/15 as the organisation had not yet addressed its processess.
· Concerning whether any cross checks and communications had been put in place to ensure that work was being undertaken in a coordinated way, the Corporate Director for Resources informed the Committee that KPMG and Commissioners have met to ensure that each of their aims and targets were focussed towards the same goals. To assure the Committee of this, Directors would have oversight of progress made and demonstrate the direction of travel. A “management response” standing agenda item also would be added to future Audit Committee agendas.
Action by: Minesh Jani, Head of Audit and Risk Management
To better facilitate interpretation of complex data, Members enquired whether colour copies could be provided to them.
RESOLVED
- That the key issues and recommendations reported at Appendix 1 of the report be noted.
- That the draft proposed opinion circulated at Appendix 3 to the report be noted.
- That an extraordinary Audit Committee be convened in the New Year in order to consider the ISA260 report 2014/15.
- That a standing item titled “Management Response” be incorporated into future agendas to deal with outstanding items outlined by KPMG.
Supporting documents: